52-week low. the hot stock right now is google up nearly 2% to an historic high. for "nightly business report" bob pisani at the new york stock exchange. >> today's market gains likely made warren buffet happy. then again he usually seems cheerful. today he told cnbc that even at today's near record prices he still sees values in stocks. >> i think they are under valued relative to other assets. in other words if i had a lot of money today i would rather own equities than own fixed dollars, long-term government bonds, junk bonds, farm land, you know, reits. they're not as cheap as they were four years ago, but you get more for your money and that's why we like buying businesses and we like buying stocks. >> and later on the program warren buffet answers questions from you on o, our nightly busi report viewers. with the dow closing in on an

all-time high somehow howe should you play the rally? our guest is senior equity strategist at wells fargo. good to have you with us. >> how are you tyler? >> terrific. thank you. warren buffet says he still sees value in equities today. do you? if so, where? >> well, you know, stocks are below if you look at a pe basis they're below the historic average. they certainly aren't as cheap as they were a couple years ago, but for our clients, what we want them investing in are things that are still sensitive to the recovery here in the states, the recovery globally. sector wise the consumer discretionary sector. even something like home improvement retail inside of that sector. it's ran a lot, ran pretty hard but still looks good. i think it has more upside. things like materials, diversified chemicals in there. also technology. i.t. consulting and services. that particular industry group. so i think there's a lot of choices out there, tyler, that are sensitive to the economy, not only here in the states, but

internationally. they're not over valued and, you know, certainly the fed having the markets back or at least that's what i would term it, doesn't hurt either. >> but you know, scott, here we've got the sequester today. we have a lot of worries about what's going to happen in the job market and the market is rallying and what's driving this rally? >> well, really, if you look at the sequester amount, 1.2 trillion over ten years shall the cbo says, you know, already legislated we'll spend about $45 trillion over the next ten years so 1.2 in my opinion is a really small amount. i think the market knows that. i think while it is going to create some head winds, maybe you see a couple tenths percent gdp or something like that, that is a head wind but it's not going to stop the economy. i think we'll see about 2.5% growth this year so, really, the market's been able to shrug that off. i think the market's pretty convinced that really we're not probably going to see many cuts to entitlements, many cuts to spending. you can easily make the argument

that down the road that's going to be trouble but for the next 12 to 24 months, i think the market is likely to do okay. >> a quick, final question, scott. are you worried at all about the pace of consumer spending with the expiration of payroll tax cut? that's number one. number two, are you seeing any areas that you think are highly overvalued today? >> well, you know, i think what i want to do is stay away from the defenses. really we've had a good rally so far this year but health care and staples have led the way. i don't think that's going to hold. so those two sectors are defensive. i don't think they're going to hold up through the course of the whole year. but consumer spending, you know, confidence is way up. housing prices are rising. consumer spending has surprised me. i think it is going to continue to surprise the market as we move through the year. i think it's going to be up. it's not going to surge but it's going to be enough to put the economy into that modest growth kind of territory. >> thank you very much. speaking of sequester, today

is the first business day where the government's automatic budget cuts, known as sequestration, took effect. the $85 billion in cuts officially began friday night. now although no talks are scheduled to try to end the spending cuts, at today's first cabinet meeting of his second term president obama spoke about the potential impact on federal agencies and the american people. >> we are going to manage it as best we can to try to minimize the impacts on american families, but it's not the right way for us to go about deficit reduction. it makes sense for us to take a balanced approach that takes a long view and doesn't reduce our commitment to things like education and basic research that will help us grow over the long term. >> meanwhile a new survey from the national association for business economics shows a majority of economists are opposed to the automatic sequester cuts but say washington does need a sound plan to reduce the nation's budget deficit. well, joining us now to discuss the impact of the sequester

spending cuts we're happy to have representative ed royce a republican from california. congressman royce is also a senior member of the financial services committee. welcome, congressman. let me begin by asking you. it's a big employer in your district. were you getting calls from employees today and what were you saying? >> i didn't get any calls from employees of rathion but i think most people understand at this point we just saw a massive increase in taxes at the end of the year. the president got what he wanted. huge tax increases. if you think about it, when we're running deficits over a trillion dollars a year and the question under the sequester, a proposal that came from the white house, that he put forward, to have a 2% reduction, which is really just a reduction in the growth of government, but a 2% reduction, that's not a tremendous amount of money.

but it would get us back on the glide path toward a balanced budget. this is why from our standpoint we would like to see that 2% done more rationally. we twice passed legislation into the senate to rationally allocate those cuts. but the senate hasn't taken up a budget for four years so we don't have a partner there. now we're looking at legislation that would give the president the authorization to make the cuts in the bureaucracy, in the government agencies, or reduce that rate of growth. more rational approach than this one. we all agree this approach is not the best approach but it originated in the white house and now we have the white house saying, no. rather than this we want to have further tax increases. he doesn't want to cut -- he does not want to cut spending on anything and that's a big problem given the trajectory. >> congressman royce, when you put together these spending cuts plus the ones that were taken back in 2011 and the tax increases from earlier this year, you get pretty close to

that $4 trillion in deficit reduction that was part of the so-called grand bargain idea of a couple years ago. how worried are you that that level of fiscal tightening is going to affect the economy dramatically and cost jobs? >> here's what i think the market was worried about. and that is the uncertainty created by deficits that just seemed to compound. a $16 trillion debt now. that over the last four years has ramped up at an incredible rate of speed. what this is actually doing is sending the message if we can manage just a 2% reduction that at least we can turn the corner and we can bring that glide path back down toward balance and i think that reassures the market. i think that brings money in off the sidelines where they say it might, you know, it might be the case that they're going to change that appetite for ever more reckless spending.

and you noticed the concern economists have raised with this being unsustainable. they say ten years out, you're going to have an implosion if we don't change this course. this now begins to do that. i just wish we could reach an agreement where they're targeted like the legislation we passed over in the senate. >> right. >> we're still working to try to target the cuts. >> congressman, thank you very much for being with us this evening. >> thanks for the opportunity. >> appreciate it. coming up we take a look at things that are working and not working in the u.s. economy. in focus. the american recovery. now let's take a look at how the markets fared overseas this day.

as you probably noticed tonight is the beginning of a new chapter for "nightly business report" and i have a new partner tyler mathison and a new owner cnbc and we have a new set right here at cnbc headquarters in new jersey. but we will still bring you the same thing that "nightly business report" has been giving you for the last 34 years. in-depth analysis of the top business stories of the day delivered in an objective way. and, tyler, i have to say it's great to be sitting next to you again. we haven't done this together since 15 years ago. >> it is great to have you back home here. >> thank you. >> great to be back with you, susie, as well. as you know, that new chapter does begin this evening. but one thing will not change and that is npr's commitment to public television and, as the saying goes, to viewers like you, we understand and i understand that you watch because you trust and you've trusted nbr for 34 years now.

we aim to honor that legacy and give you the best, most complete business news show on television every night. great to be here with you, susie. in our market focus tonight we begin with oil flirting with $90 a barrel the first time it's been that low since christmas time. major energy stocks followed the price down with one exception. that would be up more than 3% in percentage terms. 38% over the past six months. now the hess board boosted the dividend to a dollar a share from 40 cents, started a $4 billion stock buyback, and said it is getting out of the gas station business to focus on exploration. also in our market focus tonight the private equity firm kkr nearing a deal to buy the industrial machinery maker gardener denver according to reports. gardener denver stock closed up more than the 3.5% valuing the company at $3.6 billion. gardener denver makes air

handling systems and pumps among other products. in other companies making news nbia, the bond insurer, rocketed up 24% on news that a court dismissed a lawsuit against the company's business strategy. shares ended the day up about $2.50. hsbc losing ground after its 2012 profit fell 6%. the low forecast, europe's largest banks will increase its dividends by 11%. pharma company trying to hold off a takeover, offering shareholders 20% of the royalties on its multiple sclerosis drug. shares rose better than 3%. tonight nbr kicks off a week-long series called "in focus, the american recovery." the key question to paraphrase the late new york mayor ed koch, how are we doing? here's carl quintanilla with a look at what's going right in the economy and what's not. >> reporter: that sound you hear is the american economic recovery at its sweetest.

the hammers and drills of the housing market. across the country, the median price of a home is up 7% in just the past year. sales of existing homes are at multi-year highs. since housing is about 1/5 of gdp, it may be the best thing we have going. >> as the housing starts to bottom and recover, at the end of the day americans have more of their net worth in their house than any other asset. and this is a huge part of the confidence, rebuilding of confidence. >> reporter: housing is one of three pillars that are responsible for the recovery as we know it. autos is another. the revitalization of the big three carmakers hasn't brought many new plants, but it has brought new production. an estimated 15.5 million units this year. up from just 10.5 million at the lowest. some call it the new center of gravity of a manufacturing renaissance. also working? high end retail.

sales at names like macy's, saks, and michael kohrs suggest the wealthy in this country are holding up their end of the consumer spending bargain. >> that 1% of the population that is going to the high end retailers really has recovered the fastest from the financial crisis and they're out there and spending money. >> reporter: but there's plenty that's not working. despite the strength of the stock market wall street banks are retrenching, laying off workers, adjusting to an environment where return on equity isn't what it once was. big ticket exports, to countries like china, have been a challenge for companies like caterpillar, facing a new wave of lower cost competition. and for all the enthusiasm about natural gas in this country, some say regulatory uncertainty has kept a lid on production, hand cappiy capping what may bef the biggest long-term goals, energy industry penlgs. in the end the main uncertainty to this recovery involves this man. ben bernanke and the federal

reserve. >> we are getting some traction in the housing market. >> reporter: if the economy truly gains traction, when and how does the fed pull back on the monetary stimulus? what happens to mortgage rates? to government debt payments? in short, can the economy survive the fed's band-aid coming off? four years after a bruising, economic crisis, no one, it seems, has a good answer for that. carl quintanilla for "nightly business report" new york. here with his take on several of those issues is ken rogoff professor of economics at harvard university. hi, ken. you heard carl's report. how would you describe the health of the economy and also how we're doing in this american recovery? >> well, we have a modest recovery that's stable and i think that's encouraging people because it doesn't feel like the floor is about to fall out. on the other hand, it's not booming, either. and i'm not sure there is really any reason to believe it's going to be booming any time in the

next few years. so the markets are up because at least some of the uncertainty has been pulled back, even the mediocre sequestration in washington and we have the very low interest rates but it doesn't mean things are going to be fantastic for everyone how worried are you about the sequestration cuts to spending, the tax hikes that kicked in earlier this year, and the other budget cuts that were taken back in 2011? how worried are you that they are going to slow what you describe already as a tepid recovery? >> i think they have been slowing the recovery a bit. there's been fiscal restraint. on the other hand, it's not a free lunch. you can't just have the debt grow forever. there was going to be some scaling back. obviously, we'd like to see it done in a more rational way. the grand bargain they're talking about, fixing the tax

system. there are things the government does we need and in some sense the sequestration is sticking needles everywhere in the economy to see who hurts. so certainly things could be a lot better but i don't think they're such that they're going to up end the modest recovery. >> a lot of people are very worried about what the sequestration is going to mean for jobs. as you know, we have the february employment report coming out on this friday. a lot of people expect the unemployment rate will stay at the 7.9%. so looking ahead over the next couple months, how is the job market going to do with the sequestration -- better, worse, the same? >> i think the sequestration will hurt jobs a little bit for a year for a long time to come. i think it's already hurt jobs with some of the uncertainty. we're likely to continue to see this sort of modest improvement that shows us many, many years away from even getting to 6.5% unemployment, which might be the new normal here. so the sequestration isn't just

the fiscal tightening. it's just the fact they can't come to coherent policy. what do we need to invest in infrastructure, education, how can we improve our tax system. that's kind of depressing. the market seems to be saying, look. i'd rather have a mediocre plan than no plan. >> all right. we'll have to leave it there. ken, thank you so much. >> thank you. congratulations. >> thank you. >> harvard professor of economics, author, and economist. all righty. tomorrow on "nightly business report" we continue our special report, the american recovery, with an in-depth look at the housing sector. but coming up long before that, the oracle of omaha answers your questions. warren buffet unplugged, next. first let's look at today's winners and losers on the s&p 500.

you asked and warren buffet answered. we asked you, our viewers, to send in questions for the oracle of omaha. the questions poured in on everything from what can be done about the national debt to how to save for retirement. becky quick sat down with the ceo of berkshire hathaway and here's what he had to say to you. >> susie, thank you very much. we are with warren buffet just outside omaha, nebraska at the fulfillment center for oriental trading. this is one of berkshire hathaway's most recent acquisitions, not the most recent. that would be heinz. but oracle trang was purchased in the fourth quarter back in november for about $500 million by berkshire hathaway. and again, we are fortunate enough to be sitting down with mr. buffet. warren, we've had several viewers from nbr who wrote in and have questions for you. if you don't mind answering a few -- >> let's do it. >> let's jump right in. the first question comes from tim reid who asks, what is your view on the national debt? is it something that can ever be paid down? how important is it to do so? >> yeah.

it's not important to pay it down. it's important to keep it from rising sinlt consistently. the country can handle a growing amount of debt as long as it doesn't grow faster than the country. until fairly recently we've been doing well but in the last few years it started to gallop upwards and it is important we get it to level off in the fairly near future. but berkshire can take a lot of debt. it couldn't take a lot of debt 40 or 50 years ago. now it has a lot of earning power and this country has a lot of earning power. >> here's another question. what, specifically, would you recommend to do to fix our entitlement programs like medicare? >> well, the bigger problem than medicare is the whole health care system. as long as the health care system is eating up 17.5% of our gdp, which is far more than anyplace else in the world, we are going to have a problem with paying for it whether it's paid by the government or by corporations or by individuals.

that is the ultimate problem. unless we get that under control, we are going to be facing problems, whether the corporate level or the government level with our health care costs. >> okay. another question comes in from david wade who asks i've been a ve very successful investor who averages 18% over the last few years but right now everything looks too rich for my blood. isn't that a bad sign? >> it may be a bad sign for him. everything doesn't look too rich for my blood. plenty of things do. but there are lots of investments out there i like for the long term. very good businesses selling at reasonable multiples of earnings. >> 18% though. is that a really high -- that's a high bar to jump over. >> if he's been making 18% there will be a line in front of his door. >> finally, there is a question that comes in, saying, i'm graduating college this may. are you hiring? >> we're hiring at some of our companies. probably at geico we'll add a

thousand people net this year. and of course if we lose -- there is some turnover too. we'll have a lot of people there. we have 288,000 employees. i don't know what our turnover is. but i'll bet it's 30,000 or 40,000. so we hire that many just to replenish what we need and then some of the companies are growing. so, sure. we're hiring at a lot of companies. >> warren, i want to thank you very much for joining us on "nightly business report." >> thanks. it's been a pleasure. >> i'll send it back to you and tyler. >> becky, thank you very much. one last item about warren buffet, he is richer than he was a year ago by $9.5 billion. but he fell by one spot in the forbes ranking. out today the world's richest people. his $53.5 billion net worth was good for fourth place. it is the first time since 2000 that buffet hasn't been in the top three. the spanish retailer amancio ortega worth $57 billion edged out buffet for third. the top two remain the same as

2012, mexico's carlos slim and bill gates in second and oracle's larry ellison was fifth at $43 billion. in case you are wondering there are 1426 billionaires worldwide by "forbes'" count, 200 more than a year ago. before we go, we want to point out that nbr.com has a new feel. when you log in you'll see our facebook page where you will still be able to view full programs and post your comments. again, it is still nbr.com. and that's "nightly business report" for monday, march 4th. we remind you this is the time of year your public television station seeks your support. >> good night, everyone. "rick steves' europe" is made possible

by generous support from... over 250 cities in 40 countries. including one you'll never forget. we know why you fly. we're american airlines. this program is brought to you in part by bread for the world -- an advocacy organization working to end hunger and poverty at home and abroad. hi, i'm rick steves, back with more of the best of europe. this time, we're in a city that for centuries has been a magnet for world travelers -- we're in eternally entertaining rome. ♪

there's history everywhere here in the city of the caesars. the coliseum reminds us of ancient pageantry and gladiators. monuments like trajan's column boosted imperial egos. statues show how emperors were worshipped as gods on earth. and the pantheon, with my favorite skylight anywhere, inspired future ages to great domes of their own. but we'll learn about these ancient wonders in another episode. right now, we're interested in a different rome,